- Wait-and-see mode preserved, as bearish majority over bulls is widely stable at 18 pp (20 pp yesterday)
- In current volatile environment, prices are continuously ignoring the nearest resistance area at 1,233/27
- Daily and weekly indicators are substantially diverging from each other; the latter foresee a rally next week
- Economic events to watch over the next 24 hours: Swiss Retail Sales (Feb) and Manufacturing PMI (Mar); Euro zone Manufacturing PMI (Mar) and Unemployment Rate (Feb); US Non-Farm Payrolls (Mar), Unemployment Rate (Mar), Average Hourly Earnings (Mar), ISM Manufacturing PMI (Mar) and University of Michigan Final Consumer Confidence (Mar); FOMC Member Mester Speaks; UK Manufacturing PMI (Mar)
Gold continued to trade higher after recording its biggest quarterly jump in almost 30 years amid waning expectations of US rate hikes. Investors are awaiting US non-farm payrolls report due later in the day for more clues. Economists anticipate the report to show growth of 200,000 jobs, after surging 242,000 in February, with the unemployment rate remaining steady at 4.9%. Global manufacturing surveys due today will also be in investors' spotlight.
The number of Americans applying for unemployment benefits unexpectedly increased last week, but a steep decline in layoffs in March suggested the labour market momentum remained intact. Initial claims for state unemployment benefits surged 11,000 to a seasonally adjusted 276,000 for the week ended March26, according to the Labor Department. Economists had forecast claims remaining unchanged at 265,000 in the latest week. The four-week moving average of claims, considered a better gauge of labour market trends as it strips out week-to-week volatility, rose 3,500 to 263,250 last week. Applications for unemployment benefits have now been below 300,000, a threshold associated with healthy labour market conditions, for 56 weeks, the longest stretch since 1973. In the meantime, a report published earlier in the week showed US private companies continue to create new positions, with 200,000 jobs added this month, according to payrolls processor ADP and Moody's Analytics. A more comprehensive non-farm payrolls report from the Labor Department is due later in the day. Economists anticipate the report to show growth of 200,000 jobs, after surging 242,000 in February, with the unemployment rate remaining steady at 4.9%.
Canada's economy surprised by a stellar performance in January, with gross domestic product increasing the most in two-and-a-half years, boosted by strong manufacturing, retail trade as well as oil and gas extraction. The Canadian economy expanded by a more-than-expected 0.6% in January from the month before, growing for the fourth consecutive month. The figure was twice as much as economists had projected. Goods-producing industries surged by 1.2%, according to Statistics Canada, far better than the 0.4% growth seen in the service sector. Manufacturing grew 1.9% in January, up from a 1.1% increase in December. That indicates that the Canadian Dollar's decline is finally starting to help manufacturing exporters, as economists had predicted. Measured on an annual basis, the economy grew 1.5%, also coming in above earlier projections of 1%.The first quarter is looking better than expected after receiving a great upward momentum from December. Also overall the fourth quarter was up 0.8% compared with the expected 0.1%. Economists anticipate the BoC to positively revise its 1% forecast for the first quarter in the upcoming April's Monetary Policy Report. BoC Deputy Governor Lynn Patterson said that Canada's economy is diverse enough to move from its commodity focus and achieve a new balance of economic growth.
Upcoming fundamentals: US industry to resume growing in March
Friday's fundamental session will be predominantly focused on the US, where a bunch of economic data is due to be announced. Monthly payrolls and other labour market indicators are first up at 12:30 GMT. Economists expect an increase of 206,000 new jobs in March. The pace is also foreseen to slow down from 242,000 in February, but it should anyway remain around the mean trend of preceding months. At 14:00 GMT the ISM Manufacturing PMI data is out. The indicator is set to advance beyond the 50 points' threshold, which divides expansion from contraction, for the first time in five months. In line with forecasts, the assumed pick up to 50.8 points in March from 49.5 points in February will signal the US manufacturing industry is wrapping up with recent weakness. The day will not end at this note, because at 4:00 GMT in the morning on Saturday the Cleveland Fed president Loretta Mester will talk about the monetary policy and economic outlook. She votes for policy decisions in 2016 and is assumed to be a member of hawkish FOMC camp.
Gold maintains sideways outlook
Gold prices attempted to skyrocket again on Thursday; however, by the end of American market session the bears managed to push the bullion down to 1,232 and below the 20-day SMA. Intraday peaks were in turn reaching the 1,240 area. The metal's mid-term intentions are still unclear, because it seems to be fully ignoring the technical cluster between 1,227 and 1,233. Only a plunge under the 1,215 level (March 23/28 lows) will renew talks about more losses down to 1,199/98 where a new monthly S1 is resting now. Daily technical indicators have also moved a bit more into negative territory.Daily chart
XAU/USD is flirting with the mid-March downtrend, while the 200-hour SMA does not allow a selloff to succeed. It requires two consecutive days of trading below the moving average, in order to push the expectations down to the Feb 26 low and the Mar 28 low near 1,210. Alongside, any advance will have to cope with the Mar 30 peak at 1,244 and the next resistances are represented by the March 22/17 highs at 1,260/71, respectively.
Hourly chart
Sentiment remains depressed as market is in limbo
Meanwhile, almost 58% of all OANDA clients are preserving a positive view on gold prices. This is down slightly from 59% we had observed before in our previous review. While also being bullish on the matter, SAXO Bank longs' advantage is smaller at 53.7% against 46.2% for short market participants.